Michael Whelan Aran’s chairman and founder said: There is nothing in this

Michael Whelan, Aran’s chairman and founder, said: “There is nothing in this that we can possibly begin to recommend It is simply not adequate.”Investment column, page 22. Arco said that the arrangement transfers value away from Aran and has tabled an alternative offer of pounds 177m if shareholders agree the deal.Arco also attacked Aran’s decision to seek shareholder approval for the Connemara move on 23 October, the day before Arco’s offer closes. The US group said: “Aran’s decision to select a meeting date of 23 October 1995 is a blatant attempt to frustrate the due process of Arco’s offer and, as a consequence, to complicate matters for Aran’s shareholders.”Arco is believed to have increased its offer on the basis of the value of Aran’s stake in the Schiehallion field west of Shetland – widely thought to be the main reason for the US group’s bid. The value of the fresh offer could also fall if Aran’s shareholders approve a deal agreed two weeks ago with Statoil in relation to the Connemara field off the west coast of Ireland.Under the Connemara deal, Statoil has six months to decide whether to pay millions of pounds for the cost of drilling and testing in the area in return for taking half of the production from the field. It also emerged that Arco approached Aran last Friday in the hope of discussing an agreed takeover, only to be told that the company was in talks with a potential white knight.Arco’s renewed offer compares with an earlier bid of pounds 160m and is below the level expected by some City analysts.

On the other, it wants to reduce unemployment, which President Chirac described as his “priority of priorities” in the election campaign.The trouble is that as the government reduces the budget deficit, so it needs to ease monetary policy in order to bolster economic activity and increase jobs. This leads to the conclusion that the central bank will not be able to defend the currency through higher interest rates for long.. MARY FAGAN

Industrial Correspondent
The battle for control of the Irish oil company, Aran Energy, intensified yesterday as Arco of the US raised its offer to up to pounds 182m, and Statoil of Norway confirmed it may launch a counter-bid. On the one hand it wants to cut the budget deficit in order to meet the Maastricht convergence criteria for monetary union. “We’re in for a further period of pressure in which you could see the franc falling to 3.60 or 3.65.”The doubts in the currency markets about the French rate rise stem from a widespread belief that France has incompatible policy objectives. “The French economy is in no shape to survive a protracted period of higher interest rates.”"I don’t think it will hold the line,” said Paul Mortimer-Lee, chief economist at Paribas Capital Markets. The Banque de France strategy of raising interest rates was seen as offering only short- term support.”This is only a holding measure in the hope the problem goes away,” said Kit Juckes, currency strategist at NatWest Markets.

Speaking in Washington at the annual IMF meeting, he said the outlook for competitiveness, inflation and growth was good, and the government deficit was on a downward path.However, in London’s foreign exchange markets there remained big question marks about the sustainability of French economic policy. Three-month rates rose to 7.40 per cent from 6.375 per cent.The Bundesbank’s president, Hans Tietmeyer, said “today’s decision from the Bank of France will help to overcome the recent uncertainties in the currency markets.”The French finance minister, Jean Arthuis, strove to convince the markets about the underlying strengths of the French economy. But the foreign exchange markets remained sceptical about the ability and commitment of the French government to sustain a prolonged defence of the franc with higher interest rates.After falling to 3.53DM in early trading, the franc recovered to 3.51 after the French central bank raised its overnight rate from 6.15 to 7.25 per cent. PAUL WALLACE

Economics Editor
A rise in interest rates of over 1 per cent by the Banque de France brought respite to the beleaguered French franc. The vice-finance minister, Kyosuke Shinozawa, said: “It is Daiwa Bank, rather than the ministry, which has the obligation to report the incident.”But it is certain to provoke suspicions that there was collusion between the ministry and Daiwa to allow the bank to cover its losses before revealing them publicly.. Both US federal law and the state banking regulations of New York require that financial institutions report illicit activities immediately.”We wanted to avoid inflicting damage to the Japanese financial system, which was already facing a series of collapses with the Cosmo Credit Corporation in July, and Hyogo Bank and the Kizu Credit Union in August,” said Mr Abekawa, the departing chairman. The outgoing president, Mr Akira, received a letter of confession from Mr Iguchi on 24 July, and informed the ministry’s banking bureau on 8 August.

But it was not until 18 September that the federal authorities were informed. John Guinness, chairman of BNFL, has warned that he will refuse to accept the plants unless the government specifies how the billions of pounds in clean-up liabilities are to be funded.. One possibility is that the desire to sell the nuclear company could tip the balance against a reference in spite of political pressure to call the bids in.The Government has also to agree conditions with the state-owned British Nuclear Fuels to assume stewardship of the the ageing Magnox plants that are to be left out of the sale. Both generators have tabled agreed bids for regional electricity distribution and supply companies.A DTI source said that the effect on nuclear privatisation of a referral would depend on its terms and timing. Advisers believe they have convinced ministers that the City will be willing to buy both in quick succession.There is also a view in the City that the pounds 2.5bn nuclear sale could be delayed if the Government decides to refer the takeover bids by National Power and PowerGen to the Monopolies and Mergers Commission. This indicates April at the earliest for the sale, which is expected to fetch pounds 1.5-pounds 2bn.